CRA Should Not Subsidize Proof

People like free money, so it’s not surprising that the owners of Proof Brewing Company have requested hundreds of thousands of dollars in taxpayer subsidies to help them renovate the old Coca-Cola bottling plant on South Monroe Street. But just because people like free money doesn’t mean they should get it, and taxpayers and local officials should reject Proof’s pleas.

Proof Brewing Company was founded in 2012 and, according to its website, it’s Tallahassee’s largest independently-owned production brewery. It has spent the last six years in Railroad Square and plans to remain there until the renovations of the Coca-Cola bottling plant are complete, which is planned for the end of 2018.

To help with the cost of the renovations, Proof recently asked for $450,000 from the Tallahassee Community Redevelopment Agency. The money would be paid out of the higher property tax revenue the city hopes to collect due to Proof’s investment raising property values in the area around the plant. Proof is also in line to receive some reimbursement for development fees, city property taxes, and county property taxes.

There’s an argument to be made that Proof should share in the higher property tax revenue generated by its investment, but there are other things that need to be considered. First, would the investment take place without the subsidy? If so, then the additional tax revenue can be used on something else — more police, teachers, or parks. Proof has already acquired the property and did so for a reason, so it seems unlikely that it won’t relocate unless taxpayers help offset some of the cost.

There are also other investments that could increase property values that don’t primarily benefit one business. For example, nicer roads, sidewalks, street lighting, or public spaces would provide benefits for all the businesses in the area, not just Proof, and these investments could be funded with the same money.

Any subsidies given to Proof also give it a competitive advantage over other Tallahassee breweries, such as Ology, DEEP and Lake Tribe. If these other breweries want to move into a new building or expand operations at their existing site someday, is the city going to give them the same deal it’s giving Proof? The same can be asked for all the other area bars and restaurants that compete with Proof for customers. Tax breaks for specific businesses inevitably mean that the government is picking winners and losers, and that’s not the government’s job.

Finally, there’s always the possibility that Proof will fail in its new location. While Proof has been a successful business so far, an economic downturn or a few bad decisions by management could put it out of business. This would decrease rather than increase property values and put taxpayers on the hook for the subsidies.

Proof provides a great product and it has been a good member of the Tallahassee community, but that doesn’t mean it deserves special treatment. Tallahassee should resist the urge to give Proof, or any other business, taxpayer money.

Adam A. Millsap, Ph.D. is the assistant director of the L. Charles Hilton Jr. Center for the Study of Economic Prosperity and Individual Opportunity at Florida State University.